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What Happens If I Revoke My Trust?

EstPlan5

We often refer to estate planning trusts as “living trusts” or “revocable trusts.” But what does it mean to revoke a trust? How would you do it? And what would the impact be on your property and estate plan going forward?

First, let’s review how a living trust works. Most living trusts are made by single persons or married couples acting together. The person making the trust is known as the settlor or the grantor.

To give a hypothetical illustration, George and Alice are married and decide to create a joint living trust. They sign a document creating the trust–i.e., a trust instrument. George and Alice then name themselves as co-trustees. This is perfectly legal. In fact, it is common practice for the settlors to serve as the initial trustees of a living trust. After signing the trust instrument, George and Alice then transfer their existing property–e.g., their home, bank accounts, investment portfolio–into the trust.

Revoking the Trust

Some years later, George and Alice decide they no longer want to keep their assets in the trust. By design, a living trust can be modified or revoked at any point during the settlors’ lifetimes. This means George and Alice can exercise their authority to revoke the trust, requiring the trustees (themselves) to return the assets to the individual settlors (also themselves).

Essentially, revoking a trust means reversing the process described above. First, George and Alice would transfer assets from the trust back to themselves as individuals. Then they would sign a formal document revoking the trust. Like the original trust instrument, the revocation should be notarized.

The trust instrument itself may include additional directions for the proper means of revoking the trust. Florida law requires the settlor and trustees to comply with any such directions. If the trust does not provide a method of revocation, the trust can be revoked through language in the settlor’s will (signed after the trust instrument) or through “[a]ny other method manifesting clear and convincing evidence of the settlor’s intent.

Revoking a Joint Trust Can Get Complicated

Now you may be asking, “Do both spouses have to consent to the revocation of a joint trust?” Under Florida law, if the trust consists solely of community property, then either spouse may revoke the trust on their own. But if the trust includes separate property contributed by just one spouse, then a settlor can only revoke the trust with respect to their own contribution.

It is also important to note that when a living trust has a single grantor, the trust itself becomes irrevocable the moment that settlor dies. With respect to a joint trust, things are a bit more complicated. Depending on how the trust instrument is worded, part of the trust may become irrevocable after one spouse dies.

This is why it is important to work with an experienced Fort Myers estate planning attorney who can advise you on the best means of creating a trust to protect you and your family. Contact the Kuhn Law Firm, P.A., at 239-333-4529 today to schedule a free consultation.

Source:

flsenate.gov/Laws/Statutes/2012/736.0602

https://www.kuhnlegal.com/florida-bar-issues-estate-planning-guidance-for-covid-19-emergency/

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